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 Crisis, What Crisis?

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NETPark Research Institute

30 September 2008
 4arrie Hensby
Chief Executive
NEL Fund Managers Limited

www.nel.co.uk
Where are we now?

‡ A shortage of cash
± VC in the UK

‡ Risk aversion
± VCs make the most money investing at the bottom of the cycle

‡ Cost of money has increased

± valuations have fallen; interest rate margins have increased

‡ Flight to quality
± only the best will get funded

‡ 4ack to basics
± balancing risk and reward
—os and —on¶ts

‡ You can never have too much cash

± —o get some when you¶ve got some!
‡ You have to survive to prosper
± —o get competitive offers, but take one!
± —on¶t over gear
‡ Prepare well
± —o research
± —o be investment ready
‡ 4usiness Plan
‡ Presentation
‡ —on¶t b*llsh@t!
‡ —o be realistic
± —o get good advice (accountant, bank manager, solicitor)

ß
 
  
     ß
Robert F Kennedy
The End

www.nel.co.uk
Crisis, What Crisis?

‡ The Advert

‡ The Venture Capital (³VC´) Mantra

‡ Management

‡ Market

‡ Product

‡ Summary
The Advertisement

‡ NEL was established in 1991 (independent & NE only)

‡ Manages 9 Funds with a total value of c.£70m
‡ 7 Funds are fully invested
‡ 2 Funds are investing (c.£5m available):

Funds Investment Stage Sector Focus

Remaining Range Focus
North East £3m £50,000- Early Manufacturing,
Investment Fund 34 £500,000 Stage & Services &
thereafter Technology
NEL Growth Fund £2m £50,000- Early Manufacturing,
£350,000 Stage & Services &
thereafter Technology
The Venture Capital Mantra

‡ What are the 5 things that a VC is looking for in an investment:

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‡   
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‡  
Management

‡ The team

‡ Must have ownership of the 4usiness Plan

‡ The M— must be financially literate

‡ The —irectors must understand costing, budgeting and financial control

‡ The —irectors must understand the marketplace

‡ The —irectors should have small company experience

‡ The —irectors should have a plan to cover ³the holes´ ± if there are any

‡ —on¶t think you can do it with an NE—!

Market

‡ Size

‡ Growing

‡ Competition

‡ Competitive advantage or unique selling proposition

‡ Compelling sales and marketing strategy

‡ Well grounded sales forecast

Product

‡ Intellectual Property

‡ Product differentiation

‡ Technology risk

‡ Production risk
Summary

‡ Management is the key

‡ Its tough ± are you?

‡ —oes your Plan work?

‡ Raising finance is the start of a journey

‡ Know your market; know your customers

‡ Product or service is important; but the ability of management to exploit it

profitably is more important

‡ It¶s about people STUPI—!

‡ CASH is king